P.V. Subba Rao ORDER
P.K. Choudhary, Member (J)
1. The instant appeal has been filed by the appellant assessee, M/s. Himadri Specialty Chemical Ltd., against demand of service tax confirmed by the learned Commissioner, Service Tax, Kolkata vide Order-in-Original dated 13.06.2016.
2. The facts of the case in brief are that the appellant is engaged in the business of manufacture of coal tar products at various manufacturing units for which they have obtained registration with jurisdictional Central Excise department for payment of central excise duty. The Registered Office of appellant is registered with Service Tax department for payment of service tax under Reverse Charge Mechanism on various input services and also as an Input Service Distributor ('ISD') for distribution of input service credit to its various manufacturing units. The appellant has not rendered any output service and therefore not liable to pay output service tax. The appellant is only liable to pay service tax under Reverse Charge Mechanism (RCM) of which credit is availed for payment of output central excise duty on final products. The present proceeding has been initiated for demand of service tax pertaining to their Registered Office in Kolkata.
Proceedings were initiated by DGCEI, Kolkata, for enquiry of foreign remittance made by appellant for availing External Commercial Borrowings and on the basis of said enquiry, Show Cause Notice dated 29.11.2013 was issued proposing demand of service tax of Rs. 53,40,800/- under RCM in respect of foreign remittance made for the period April 2009 to August 2011. The SCN also proposed disallowance of Cenvat credit of Rs. 42,87,401/- for the period March 2010 to October 2012. The learned Commissioner after following due process of law adjudicated the said SCN vide which he:
(i) dropped demand for service tax of Rs. 45,95,105/- (out of total service tax demand of Rs. 53,40,800/- pertaining to foreign remittances) along with penalty and interest;
(ii) confirmed and appropriated demand of service tax of Rs. 6,84,265/- already paid by the appellant under VCES 2013. He however set aside interest and penalty on the said amount proposed in the Corrigendum to SCN issued after hearing the assessee since not proposed in the SCN issued initially.
(iii) confirmed demand of service tax of Rs. 63,207/- in respect of foreign remittances made to International Finance Corporation (IFC) towards Out of Pocket travel expenses. Interest and penalty dropped on the said amount.
(iv) dropped proposal for recovery of Cenvat credit on input service of Rs. 2,70,401/-.
(v) confirmed demand for recovery of Cenvat credit on input service of Rs. 40,17,000/- under Rule 14 of CCR 2004 along with interest thereon in respect of services provided by Axis Bank. He however set aside penalty in respect of said amount.
(vi) imposed penalty of Rs. 10,000/- each under Section 77(1)(a) and Section 77(1)(d) of the Finance Act 1994.
3. Shri Rajeev Agarwal, Chartered Accountant appeared for the appellant and Shri S.S. Chattopadhyay, Authorized Representative, appeared for the Revenue.
4. The learned Chartered Accountant appearing for the appellant, at the outset, submitted that there are only two issues in respect of which instant appeal has been filed. Firstly, the denial of credit of Rs. 40,17,000/- on services received from Axis Bank and secondly, demand of service tax of Rs. 63,207/- on foreign remittances made to IFC for Out of Pocket Expenses. He submitted that penalty on both the above demand has been set aside by the learned Commissioner and hence not in dispute, except that general penalty of Rs. 10,000/- has been imposed each under Section